Meeting Minimum Spend Requirements on Credit Cards

Meeting Minimum Spends

As much as credit card Welcome Bonuses are truly outstanding and enable us to travel more economically, it’s only one part of the Miles and Points equation. You see, most card issuers will gladly give you these Welcome Bonuses, but in exchange they require you to charge a minimum amount on the card in a specified amount of time. Mind you, there are still some cards available today and some in recent past which gave you these generous sign-up bonuses after your first spend on the card, regardless of amount. But for the purpose of today’s topic, we’ll focus on the instances where you do have to meet a minimum spend and how to go about doing it.

Sneak Peak:

What is a Minimum Spend and how much time do I have to meet it?

Concerns surrounding Minimum Spends.

What are some ways to meet Minimum Spend?

Bells & Whistles:

What is a Minimum Spend and how much time do I have to meet it?

Simply put, a Minimum Spend is a stipulated amount of money you must charge to your card within a specified amount of time. Let’s take a look at some American Express Card examples below:

As you can see above, while the timelines are consistent, the Minimum Spends are anything but. The American Express SPG card, as well as the American Express Gold Rewards Card for that matter, both have a fairly attainable minimum spend of $1,500. This equates to $500/month in spending.

Moving down the list we have the Amex Platinum card which doubles the spending requirement to $3,000. Again, this breaks down to $1,000/month in spending.

Then you have the Amex Business Platinum as well as the Business Gold cards whose minimum spends are more than triple the amount at $5,000 or effectively $1,666,67/month!

For the average person/family, attaining $1,500 in 3 months seems fairly feasible especially when you consider the amount of money you actually spend on groceries, cell phone bills, gas, etc.

But when we get into the $3,000 – $5,000 Minimum Spend domain, things start to look a little more daunting. I hate to break it to you, but our friends down in the U.S have cards that require up to a whopping $10,000 in 3 months. Now that is some scary stuff.

We briefly mentioned timelines in hitting these minimum spends. If I had to hazard a guess, most credit card issuers will give you 3 months to hit these spends but there are exceptions and I always advise you confirm what the minimum spend requirements are and the timelines as well. Another important point to be mindful of is when your minimum spend requirement timeline starts and ultimately ends. In the example above with Amex, your timeline starts on the day when your application was approved. That’s not always the case though, for instance, some targeted offers for TD credit cards start their timeline when you activate your card. This can be a huge benefit as you can ultimately control when you want to start the clock and work towards the minimum spend. This comes in handy especially when there is a promotion you want to take advantage of before the deadline hits, but don’t necessarily think you can hit the minimum spend right away. No problem – apply for the card now and then activate it when you’re ready to work towards the minimum spend!

What are some ways to meet Minimum Spend?

Everyday Purchases

First and probably the most obvious way to hit minimum spends on cards is to use your credit card to purchase/pay for things you normally would day in and day out. This is referred to as “Organic Spending” and if you’re one of the lucky ones who has highly monthly expenses already, this will account for close to 100% of your minimum spend. Some examples of organic spending are as follows: purchasing groceries, gas, dining at restaurants/bars, paying your cellphone or cable bill, etc.

If you don’t fall into the above category and are unable to organically spend $1,500-$5,000 within a few months, there are a few more options.

Pre/Overpayments & Giftcards

This is a very popular technique for hitting minimum spends. Basically as the name suggests, people will prepay or overpay anything that they can possibly can. For example, if you normally spend $100-$150 on your cell phone and cable every month, you could pay a lump sum of let’s say $500 towards your balances so that you build a credit on your account. This can also be done for utilities if you’re able to pay with a credit. I’m able to pay my water bills with a credit card so prepaying/overpaying is an option for me.

Alternatively, you can also purchase gift cards to locations that you normally would make purchases at one a day to day basis. Think grocery stores, gas stations, liquor/beer stores, drugstores and pharmacies. Most of these gift cards can be purchased directly at the retailers but depending on the card you are using, it may be more beneficial to purchase these gift cards at places where you earn an extra bonus at. For example, the Amex Gold Rewards Card offers 2 MR Points per dollar at grocery stores, gas stations and drug stores and 1 MR everywhere else. What if you had a big purchase planned at a furniture or home improvement store or were throwing a large party and needed alcohol? You could just use your credit card at that store or you could take advantage of the bonus MR points and buy the gift card at a location that offers the bonus MR points and then use the gift card for your purchase.

If you’re going to be buying gift cards, I highly recommend you get them through Ebates. Ebates is a website that earns you cash-back on your online purchases. Simply put, Ebates gets a commission for sending people to retailers websites and in return, Ebates shares that commission with you. Some of these retailers include some online giants such as Amazon, Best Buy, Expedia and other travel websites, Nike, Dyson, Banana Republic, The Bay, etc. Chances are if you do any online shopping, your favourite stores will be there.

Besides regular online purchases, Ebates also has a Gift Card Shop which allows you to buy Gift Cards to most of your favourite offline retailers as well. They include some of the following: Amazon, Chapters Indigo, Shell/Esso/Petro Canada, Air Canada, and a lot more. Best part is you earn cash-back on these purchases as well! Probably the best part about Ebates Gift Card Shop is the ability to use your Amex Card. All you have to do is choose the PayPal checkout option and from there you can use your Amex card. Obviously you’ll need to have a PayPal account as well as add your Amex card to your payment methods.

Full disclosure, signing up for Ebates using my referral code will generate a $5 commission for myself. The choice is completely up to you at the end of the day whether you wish to use my referral or not 🙂

Third-Party Bill Payment Services

There are currently two well-known companies that allow you to use credit cards to pay for things you normally couldn’t, for example, property taxes, income tax owing, rent, tuition, utilities, and so on. These two companies are Plastiq and PayTM

Essentially you are paying them with a credit card and in turn they are paying on your behalf. Unfortunately these services don’t come without a cost and typically charge around 2.5% in fees on your transactions. Ouch. However, given the value of some of these Welcome Bonuses, paying an extra $50-$100 in fees is well worth the $500-$1000+ you will obtain. Naturally, using these services every day when not chasing bonuses is not a wise move as the earnings you are receiving on your credit card will be wiped out by the fees you paying for these services.

Let’s take a look at an example:

You are $2,000 shy of hitting the minimum spend on your brand new Amex Business Platinum card and decide to pay a little extra towards your daughter’s daycare. Normally, payment is made by preauthorized payments but you decide to use Plastiq to pay above and beyond. Let’s assume you pay $2,000 and are charged 2.5% by Plastiq. This $2,000 payment would cost you an additional $50 ($2,000 x 2.5% = $50) but you’ve now hit your minimum spend and receive 75,000 MR points which are worth well over $1,000. Plus, you’ve also earned an additional 5,000 MR points for the minimum spending as well.

Using the links below to register for Plastiq and PayTM will earn you some bonuses of your own as well as myself.

Enter Referral Code PTM8290309 when you sign up to earn $10 after spending $50

“Buying” More Time

This next section deals with purchasing items in order to cross the minimum spend threshold, thus stopping the minimum spend clock and then returning said items at a later date. If you’re not in a position to spend copious amounts organically or pre-bay bills or buy gift cards for future use, and the clock is winding down on your minimum spend, then this option should be used, but only as a last resort. The premise is quite simple, let’s take a look at an example:

You are $1000 away from hitting the minimum spend on your Amex Platinum Card and only have 3 weeks left before the 3 month deadline. What do you do?

Carelessly spend $1000 on things you don’t need or can’t afford? 2.

Reserve a 5-night, refundable stay at a hotel downtown for an impromptu staycation 3.

Nothing. You take the credit hit and no Welcome Bonus and move on.

Option 1, is careless and I definitely DO NOT recommend. After all, the reason you’ve gotten into the Miles and Points game is to save your hard earned money, not to waste it.

Option 3, is a fairly sad option and I’ve seen people go down that road but it’s not necessary.

Option 2, Bingo.

Let’s continue with our hypothetical, shall we? Three weeks before the deadline, you realize that you will not be able to meet the minimum spend. You act fast and search up and book a hotel stay with a refundable/free cancellation policy. You cross the minimum spend threshold within the timeframe and shortly thereafter you are awarded with your points. You see, credit card welcome bonuses are like machines – input and output. Spend X amount of Dollars within a certain amount of months and get Y amount of bonus points.

Hooray you did it!

Not so fast…there are a few wrinkles we need to iron out for this to work as planned.

Firstly, make sure the hotel room you’re booking does in fact have a refundable/free cancelation policy and that you can pre-pay it now or else you will literally have to take an impromptu staycation which could cost you more than the hotel stay itself.

Secondly, make sure you make the reservation far enough into the near future that you can continue to make spends on your card to actually reach the minimum spend. “Wait what? I thought I did reach the minimum spend!” Yeah you heard me! What do you think will happen once you refund the hotel a few months later? Technically speaking, by getting that refund on your hotel reservation, you’ve now dropped below the minimum spend threshold and guess what? You could be faced with a claw back of that juicy welcome bonus you got! Save yourself the trouble, and keep spending until you actually hit the minimum spend amount, then cancel your booking, this way you will still be above the minimum spend and won’t be on the hook.

Lastly, a word of caution regarding this technique as well as the pre-paying/ gift card otions – as great as they are, you need to be able to float this amount of money for a few months. In other words, you need to be able to pay this added expense on your credit card bill when it comes due. For some people, throwing around a few thousand on future expenses or similar is doable but for others it just isn’t an option. Know what you can afford to spend and act accordingly.

Manufactured Spending

In its simplest form, manufactured spending is the practise of purchasing things with your credit card, liquidating/turning said things back into cash and then using said cash to pay off your bill, all at little to no cost to you. For the purpose of this post, I won’t delve into this deep rabbit hole. What I will do is point you over to my buddy Ricky’s blog for you to read up on the nuances of MS.

Wrap Up:

Let’s face it. Credit card companies love giving welcome bonuses and want your business and giving away free stuff is always a nice gesture. That doesn’t mean that they won’t make you work for it though. Hitting minimum spends can feel like a pretty daunting task especially when you have to spend thousands upon thousands of dollars in as little as 90 days. It doesn’t have to be that way though. With a little know-how and some intelligent decision making, you can make those mountainous tasks feel like molehill ones.